Missouri Senate Bill SB657

Missouri 2025 Regular Session

• Introduced: 1/30/25
• Refer: 3/13/25
• Refer: 3/24/25

Caption

Creates new provisions relating to banks that secure public funds

Impact

The bill offers an alternative to the existing requirement for collateral security when governmental entities deposit funds in excess of that which is federally insured. Banking institutions can now choose to secure public funds using either the traditional direct pledging of securities or a new single bank pooled method. This pooled method would allow multiple governmental entities to be secured collectively through a single pool of eligible securities rather than individually providing collateral for each deposit.

Summary

Senate Bill 657 proposes to repeal and replace section 362.490 of the Revised Statutes of Missouri, introducing new provisions related to banking institutions that secure the deposits of public funds. The bill primarily aims to allow banking institutions to not require security for deposits that are insured by federally recognized agencies such as the Federal Deposit Insurance Corporation (FDIC). This flexibility is intended to simplify the management of public funds by local government entities while maintaining a level of protection for these funds through federally backed insurance.

Contention

While the supporters of SB 657 advocate for its potential to streamline banking operations and reduce the administrative burden on local governments, there are concerns regarding the adequacy of protections for public funds. Critics may question whether the pooled security system sufficiently mitigates risks associated with potential bank failures. The bill also puts significant power in the hands of the director of the division of finance who will oversee the appointment of an administrator to manage pooled deposits, raising questions about oversight and accountability in the handling of public funds.